[Federal Register Volume 83, Number 81 (Thursday, April 26, 2018)]
[Notices]
[Pages 18321-18324]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-08811]


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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Notice of Issuance of Final Determination Concerning Axion Series 
Led Video Display Cabinets

AGENCY: U.S. Customs and Border Protection, Department of Homeland 
Security.

ACTION: Notice of final determination.

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SUMMARY: This document provides notice that U.S. Customs and Border 
Protection (``CBP'') has issued a final determination concerning the 
country of origin of Axion series LED video display cabinets. Based 
upon the facts presented, CBP has concluded in the final determination 
that Taiwan is the country of origin of the Axion series LED video 
display cabinets for purposes of U.S. Government procurement.

[[Page 18322]]


DATES: The final determination was issued on April 19, 2018. A copy of 
the final determination is attached. Any party-at-interest, as defined 
in 19 CFR 177.22(d), may seek judicial review of this final 
determination within May 29, 2018.

FOR FURTHER INFORMATION CONTACT: Cynthia Reese, Valuation and Special 
Programs Branch, Regulations and Rulings, Office of Trade (202-325-
0046).

SUPPLEMENTARY INFORMATION: Notice is hereby given that on April 19, 
2018, CBP issued a final determination concerning the country of origin 
of Axion series LED video display cabinets which may be offered to the 
United States Government under an undesignated government procurement 
contract. This final determination, HQ H292849, was issued at the 
request of Vanguard LED Displays, Inc., under procedures set forth at 
19 CFR part 177, subpart B, which implements Title III of the Trade 
Agreements Act of 1979, as amended (19 U.S.C. Sec.  2511-18). In the 
final determination, CBP has concluded that, based upon the facts 
presented, the assembly of imported components does not substantially 
transform the components into a product of the United States, and 
therefore, the assembled Axion series LED video display cabinets derive 
their origin from the imported components, nearly all of which 
originate in Taiwan. Therefore, Taiwan is the country of origin of the 
Axion series LED video display cabinets for purposes of U.S. Government 
procurement.
    Section 177.29, CBP Regulations (19 CFR Sec.  177.29), provides 
that notice of final determinations shall be published in the Federal 
Register within 60 days of the date the final determination is issued. 
Section 177.30, CBP Regulations (19 CFR 177.30), provides that any 
party-at-interest, as defined in 19 CFR 177.22(d), may seek judicial 
review of a final determination within 30 days of publication of such 
determination in the Federal Register.

    Dated: April 19, 2018.
Alice A. Kipel,
Executive Director, Regulations and Rulings, Office of Trade.
HQ H292849

April 19, 2018

OT:RR:CTF:VS H292849 CMR

CATEGORY: Origin

Frank S. Murray, Esq.
Foley & Lardner LLP
Washington Harbour
3000 K Street, NW
Suite 600
Washington, DC 20007

RE: U.S. Government Procurement; Title III, Trade Agreements Act of 
1979 (19 U.S.C. 2511); subpart B, Part 177, CBP Regulations; Light 
Emitting Diode video display cabinets

Dear Mr. Murray:

    This is in response to your request of December 15, 2017, on behalf 
of your client, Vanguard LED Displays, Inc. (hereinafter, Vanguard), 
requesting a final determination concerning Light Emitting Diode (LED) 
video display cabinets for purposes of government procurement under 
Title III of the Trade Agreements Act of 1979 (TAA), as amended (19 
U.S.C. Sec.  2511 et seq.). Vanguard is a party-at-interest within the 
meaning of 19 CFR Sec.  177.22(d)(1) and (d)(2), and is entitled to 
request this final determination under 19 CFR Sec.  177.23(a) and (b).
FACTS:
    Vanguard seeks a country of origin determination regarding its 
Axion series LED video display cabinets, model numbers P1 through P2.5. 
The video display cabinets are of a uniform size, 640 mm by 360 mm. 
There are 11 different models offering different degrees of ``pixel 
pitch.'' This request is limited to the first nine models in the 
series, i.e., P1, P1.2, P1.3, P1.4, P1.5, P1.6, P1.8, P2, P2.5.
    You explain that:

    The Axion series LED video display cabinets receive electronic 
signals and convert those signals into images that are displayed via 
the LEDs on the face of the cabinet. They are used by customers to 
display video images. The Axion series LED video cabinets can be used 
on a stand-alone basis, but are more commonly attached to other 
cabinets to create a much larger video screen, such as for the 
presentation of video images to large audiences.

    Vanguard manufactures, sells and distributes LED video display 
cabinets for both indoor and outdoor use. With regard to the Axion 
series LED video display cabinets at issue, Vanguard imports the 
components of the video display cabinets and assembles the cabinets 
from the imported components at their facility in Lakeland, Florida. 
You indicate that the components of the Axion series LED video display 
cabinets (some of which are imported with pre-packaged screws for use 
in assembling the components to the display cabinet) are:
    LED Modules--Manufactured in Taiwan. Each cabinet includes eight 
LED modules. Each LED module is composed of two subcomponents--LEDs and 
LED display drivers. These subcomponents are manufactured in Taiwan. 
The quantity of LEDs and LED display drivers in each LED module depends 
upon the desired pixel pitch of the video display.
    Receiving Card--Manufactured in China.
    Printed Circuit Board (PCB)--Manufactured in Taiwan.
    Hub Card--Manufactured in Taiwan.
    Power Supply--Manufactured in Taiwan.
    Cabinet--Manufactured in China.
    You indicate that the LED modules are specifically designed to be 
used in a particular LED video display, based upon the desired pixel 
pitch and the size of the cabinet, as ordered by a customer. The PCB is 
custom-made to meet the criteria specifically requested. While a 
particular PCB board could theoretically be used in another LED video 
display, it could not be used in other types of LED goods. The hub card 
is designed to specifically handle the particular receiving card 
designed to be used in the specific LED video display as ordered by the 
customer. In theory, it could be used in a different LED video display, 
but it could not be used in other types of LED goods. Similarly, the 
receiving card, power supply, and cabinet can be used in other LED 
video displays, but cannot be used in other types of LED goods.
    You state that the LEDs constitute the majority of the component 
costs of the video display cabinets. You describe the function of the 
LEDs as ``a type of semi-conductor that conveys electronic signals into 
infrared-rays or light.'' The LED display driver is described as ``an 
integrated circuit that provides the circuitry necessary to interface 
most common microprocessors or digital systems to an LED display. [It] 
is an electrical device that regulates the power to an LED or a string 
(or strings) of LEDs.'' The receiving card ``reads the program commands 
from the sending card or the computer transmitting the signals 
regulating the brightness/chromaticity of the LEDs.'' The PCB 
``mechanically and electrically connects electronic components.'' 
Vanguard receives the PCB with the hub card integrated onto the PCB. 
The hub card ``sends power to the LED modules, as well as instructions/
information from the receiving card. The LED modules and the receiving 
card are attached to the PCB by Vanguard. The power supply component 
receives electrical power from an external source and provides power to 
the electrical components of the LED video cabinet. Finally, the 
cabinet, a die-cast aluminum cabinet, provides the structure into which 
the other

[[Page 18323]]

components are installed to create a video display cabinet.
    You describe the assembly process in the United States as follows:
    1. Attaching and affixing (via screws) the power cable to the 
cabinet frame.
    2. Affixing the power supply to its mount via screws and connecting 
the power cable to the power supply's adapter.
    3. Placing the integrated PCB/hub card assembly on top of the 
previously attached components, centered in the cabinet, and affixing 
the PCB/hub card assembly (via screws) to the power supply.
    4. Affixing the integrated PCB/hub assembly (via screws) to the 
cabinet.
    5. Affixing the receiving card to the integrated PCB/hub card 
assembly via a notch in the hub card. (The hub card . . . has a notch 
into which the receiving card is to be installed.)
    6. Installing each of the eight magnetized LED modules into the 
cabinet by attaching them to their respective data/power slots in the 
integrated PCB/hub card assembly.
    After the video display cabinets are assembled, Vanguard tests them 
to ensure they function properly. Then, the video display cabinets are 
packaged for shipment to customers. You indicate that the processing in 
the United States, including the assembly, testing, and packaging 
generally requires no more than a day to complete, with the testing and 
packaging taking more time than the assembly.
    You submit that the manufacturing processes which occur in Taiwan 
to create the Taiwanese components of the video display cabinet are 
more complex than the assembly process which occurs in the United 
States or the manufacturing processes which occur in China to create 
the two components of Chinese origin utilized in the assembly of the 
finished video display cabinets. In addition, you indicate that the 
collective value of the Taiwanese-manufactured components is 
overwhelmingly the majority of the component costs of the completed 
video display cabinets. Thus, you submit that the country of origin of 
the finished video display cabinets is Taiwan.
ISSUE:
    What is the country of origin of the Axion series LED video display 
cabinets described herein for U.S. government procurement purposes?
LAW AND ANALYSIS:
    U.S. Customs and Border Protection (CBP) issues country of origin 
advisory rulings and final determinations as to whether an article is 
or would be a product of a designated country or instrumentality for 
the purpose of granting waivers of certain ``Buy American'' 
restrictions in U.S. law or practice for products offered for sale to 
the U.S. Government, pursuant to subpart B of Part 177, 19 CFR 177.21 
et seq., which implements Title III, Trade Agreements Act of 1979, as 
amended (19 U.S.C. 2511-2518).
    The rule of origin set forth in 19 U.S.C. 2518(4)(B) states:

    An article is a product of a country or instrumentality only if (i) 
it is wholly the growth, product, or manufacture of that country or 
instrumentality, or (ii) in the case of an article which consists in 
whole or in part of materials from another country or instrumentality, 
it has been substantially transformed into a new and different article 
of commerce with a name, character, or use distinct from that of the 
article or articles from which it was so transformed.

See also 19 CFR 177.22(a).
    In rendering advisory rulings and final determinations for purposes 
of U.S. Government procurement, CBP applies the provisions of subpart B 
of Part 177 consistent with the Federal Procurement Regulations. See 19 
CFR 177.21. In this regard, CBP recognizes that the Federal Acquisition 
Regulations restrict the U.S. Government's purchase of products to 
U.S.-made or designated country end products for acquisitions subject 
to the TAA. See 48 CFR 25.403(c)(1). The Federal Acquisition 
Regulations define ``U.S.-made end product'' as:

    . . . an article that is mined, produced, or manufactured in the 
United States or that is substantially transformed in the United States 
into a new and different article of commerce with a name, character, or 
use distinct from that of the article or articles from which it was 
transformed.
    The regulations define a ``designated country end product'' as:
    WTO GPA [World Trade Organization Government Procurement Agreement] 
country end product, an FTA [Free Trade Agreement] country end product, 
a least developed country end product, or a Caribbean Basin country end 
product.
    A ``WTO GPA country end product'' is defined as an article that:
    (1) Is wholly the growth, product, or manufacture of a WTO GPA 
country; or
    (2) In the case of an article that consists in whole or in part of 
materials from another country, has been substantially transformed in a 
WTO GPA country into a new and different article of commerce with a 
name, character, or use distinct from that of the article or articles 
from which it was transformed. The term refers to a product offered for 
purchase under a supply contract, but for purposes of calculating the 
value of the end product includes services (except transportation 
services) incidental to the article, provided that the value of those 
incidental services does not exceed that of the article itself.
See 48 CFR 25.003.

Taiwan is a WTO GPA country; China is not.

    In the Court of International Trade's decision in Energizer 
Battery, Inc. v. United States, 190 F. Supp. 3d 1308 (2016), the court 
interpreted the meaning of ``substantial transformation'' as used in 
the Trade Agreements Act of 1979 for purposes of government 
procurement. Energizer involved the determination of the country of 
origin of a flashlight, referred to as the Generation II flashlight, 
under the TAA. Other than a white LED and a hydrogen getter, all of the 
components of the Generation II flashlight were of Chinese origin. The 
components were imported into the United States where they were 
assembled into the finished Generation II flashlight.
    The court reviewed the ``name, character and use'' test in 
determining whether a substantial transformation had occurred, and 
reviewed various court decisions involving substantial transformation 
determinations. The court noted, citing Uniroyal, Inc. v. United 
States, 3 CIT 220, 226, 542 F. Supp. 1026, 1031, aff'd, 702 F.2d 1022 
(Fed. Cir. 1983), that when ``the post-importation processing consists 
of assembly, courts have been reluctant to find a change in character, 
particularly when the imported articles do not undergo a physical 
change.'' Energizer at 1318. In addition, the court noted that ``when 
the end-use was pre-determined at the time of importation, courts have 
generally not found a change in use.'' Energizer at 1319, citing as an 
example, National Hand Tool Corp. v. United States, 16 CIT 308, 310, 
aff'd 989 F.2d 1201 (Fed. Cir. 1993). Furthermore, courts have 
considered the nature of the assembly, i.e., whether it is a simple 
assembly or more complex, such that individual parts lose their 
separate identities and become integral parts of a new article.
    In reaching its decision in Energizer, the court expressed the 
question as one of whether the imported components retained their names 
after they were assembled into the finished Generation II flashlights. 
The court found ``[t]he constitutive components of the Generation II 
flashlight do not lose their

[[Page 18324]]

individual names as a result [of] the post-importation assembly.'' The 
court also found that the components had a pre-determined end-use as 
parts and components of a Generation II flashlight at the time of 
importation and did not undergo a change in use due to the post-
importation assembly process. Finally, the court did not find the 
assembly process to be sufficiently complex as to constitute a 
substantial transformation. Thus, the court found that Energizer's 
imported components did not undergo a change in name, character, or use 
as a result of the post-importation assembly of the components into a 
finished Generation II flashlight. The court determined that China, the 
source of all but two components, was the correct country of origin of 
the finished Generation II flashlights under the government procurement 
provisions of the TAA.
    The production process of the Axion series LED video display 
cabinets is similar to that of the Generation II flashlight in 
Energizer. All but two components are sourced from Taiwan. The post-
importation assembly process involves manual assembly of components 
that are dedicated for use as components of the LED video display 
cabinets. The individual components do not lose their separate 
identities as a result of the assembly process and do not undergo a 
change in their pre-determined uses. The assembly process, while more 
time consuming than that in Energizer, is not sufficiently complex as 
to amount to a substantial transformation of the imported components. 
Considering the totality of the information provided to CBP, and 
relying upon the court's application of substantial transformation in 
Energizer, we find that the country of origin of the assembled Axion 
series LED video display cabinets, produced as described herein, is 
Taiwan.
HOLDING:
    Based on the information provided, and the analysis set forth 
above, the imported components of the Axion series LED video display 
cabinets are not substantially transformed as a result of their 
assembly in the United States. Therefore, the country of origin of the 
assembled Axion series LED video display cabinets at issue, is Taiwan, 
the country where all of the components of the Axion series LED video 
display cabinets, except two, are made.
    Notice of this final determination will be given in the Federal 
Register, as required by 19 CFR 177.29. Any party-at-interest other 
than the party which requested this final determination may request, 
pursuant to 19 CFR 177.31, that CBP reexamine the matter anew and issue 
a new final determination. Pursuant to 19 CFR 177.30, any party-at-
interest may, within 30 days after publication of the Federal Register 
notice referenced above, seek judicial review of this final 
determination before the Court of International Trade.

Sincerely,


Alice A. Kipel,
Executive Director Regulations and Rulings Office of Trade.

[FR Doc. 2018-08811 Filed 4-25-18; 8:45 am]
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